The government could not advance 25% of the contract sum to a supplier of military uniforms because the supplier failed to secure financing, Attorney General Mulilo Kabesha has said.
In his filed defence of the government in a lawsuit filed by African Security Academy Limited in the Lusaka High Court, which is seeking damages for breach of contract and an outstanding balance of $11,298 for the supply of military uniforms, Kabesha contends that the company’s failure to secure a loan agreement from the African Trade Insurance Company to finance the contract frustrated the execution of the agreement.
He emphasised that the government fulfilled its obligation by paying upfront fees amounting to US$1,675,497.76 but could not advance 25% of the contract sum due to the company’s inability to obtain financing.
“The failure by African Security Academy to secure the loan rendered it impossible for the government to make the advance payment as stipulated in the contract,” Kabesha said.
He further argued that the company acted negligently by ordering additional goods without ensuring the loan was secured, thus complicating the situation.
The AG revealed that there is an ongoing criminal case involving a former Permanent Secretary of the Ministry of Defence, suggesting that the original contract may have been fraudulently awarded.
He argued that these irregularities, and not government negligence, hindered the fulfillment of the contract.
The Attorney General also stated that any outstanding balance could have been offset against the upfront fees already paid, as they were sufficient to cover the amount claimed.
In its statement of claim, African Security Academy Limited, incorporated in Poland, is seeking a declaration that the Ministry of Defence is obligated to accept and pay for goods procured under the $47,197,120 contract awarded in July 2016.
The company alleges that it delivered goods worth $2,866,608 but was only paid $2,851,600, leaving a balance of $11,298.
It procured additional goods tailored for the Zambia National Service, including 7,000 caps and 20,000 T-shirts valued at $996,000, which have remained undelivered due to non-payment.
It also alleged that the Ministry verbally terminated the contract without written notice, frustrating its ability to perform its obligations.
The company claims the goods were custom-made for ZNS and cannot be repurposed.
It also alleges foul play by the Ministry, including baseless corruption accusations that were later retracted.
Kabesha argued that African Security Academy bypassed arbitration and other dispute resolution methods specified in the contract before filing the lawsuit.
He added that no valid contract currently exists, as the parties had agreed to renegotiate the terms to $10,300,000, subject to proper procurement procedures.
The Attorney General insists that the company is not entitled to any of its claims and that its inability to secure financing was the primary reason for the contract’s failure.
